1. #CHAMBERECON

2. Tony Deutsch Shareholder in Charge of Tax Services

3. Tony Deutsch, CPA, MT January 24, 2017
Tax Update
Tony Deutsch, CPA, MT
January 24, 2017

4. Tax Reform: Why the Timing Might be Right for Significant Tax Changes
President Trump’s tax reform political theme
Tax reform for middle class Americans
Dates of major changes to the tax code
August 1954 (Eisenhower’s second year)
December 1969 (Nixon’s first year)
August 1981 (Reagan’s first year)
July 1984 (Reagan’s third year)
October 1986 (Reagan’s fifth year)
August (Clinton’s first year)
June 2001 (Bush’s first year)
January 2013 (Obama’s fifth year)
Fall 2017 ?

5. Tax Reform: Why the Timing Might be Right for Significant Tax Changes
From the House Republicans’ tax policy paper
Political consensus developing.
Political similarities between today and 1986: people are fed up with the complicated tax code, Members of Congress are taking it seriously, & a president might be willing take the lead.
Economic and practical issues: compliance is increasingly burdensome, preferences and subsidies pick winners and losers, and high rates discourage saving and investment in the United States.
Republican President and Republican controlled Senate & House

6. Individual Tax Reform: Income Tax Rates
Simplify - 7 Brackets to 3 Brackets
Current Rates
10%
15%
25%
28%
33%
35%
39.6%
Trump Rates
12%
25%
33%
House
Rates
12%
25%
33%
*Married Filed Jointly
**Increase in the new standard deduction will result in a person currently in the 10% bracket paying less taxes

7. Individual Example Under the Trump Proposal
2017
Married Joint
w/ 2 children
2017
Current
Trump
Total Income
$ 125,000
$ 125,000
Standard Deduction
(12,700)
(30,000)
Exemptions ($4,050 Each)
(16,200) -
Taxable Income
96,100
95,000
Tax
$ 15,503
$ ,000
Tax Savings
$ ,503

8. Individual Tax Reform: Capital Gain Rates
Current
CG Rate 0%
15%
15%
20%
Trump
Rates 0%
15%
15%
20%
House Rates 6%
12.5%
16.5%
Carried interest taxed as ordinary income

9. Individual Tax Reform
Higher Standard Deductions & eliminate personal exemptions (married joint)
Current
Trump
House
Standard Deduction
$12,600
$30,000
$24,000
Personal Exemption
$4,050 $0
Limit Itemized Deductions (married joint)
Current
Trump
House
No Cap
Phase-Out
$200,000 Cap
Eliminate state and local tax deductions
“Death Tax” Reform
Current
Trump
House
Estate tax and “Step-up”
No estate tax and no Step-up
No estate tax and “Step-up”
Deduction for child care expenses & dependent care savings accounts (DCSA)
Eliminate the marriage penalty, NIIT & AMT

10. President Trump’s Business Tax Reform
Expensing Investments
He proposes businesses will be allowed to expense new business investments immediately instead of depreciating them
In-line with proposals from Republicans in Congress
Reducing Tax on Business
He proposes a 15% tax on “businesses” – down from 35%
Republicans in Congress propose a 20% rate for corporations and 25% rate on small business income
Eliminate corporate AMT
Repatriation of Corporate Earnings
One time 10% repatriation tax for offshore corporate earnings
Republicans in Congress have shown support for a similar repatriation holiday
Repeal & Replace Obamacare
He proposes to repeal & replace Obamacare, presumably reducing healthcare costs it imposes on business.
This would eliminate the 3.8% Net Investment Income Tax and the 0.9% Medicare surtax on earned income over $250,000

11. Still Time to Reduce Your Tax Liability
Traditional IRA contribution
Contributions to business retirement plan
C-Corps or individuals with NOLs
Carry-back 2 years for refund
Elect to carry-forward for 20 years
Write-off of new fixed assets

12. New Equipment Purchases 2016 & 2017
$1,000,000 Cost of new 5-year assets
$ 500,000 – Section 179 +
$ 250,000 – 50% Bonus
$ ,000 – Depreciation $250,000 balance =
$ 800,000 Total Write Off on $1,000,000
Actual Tax Savings (at a 40% tax rate) = $320,000!!
Go through the example
Lenders, talk to your customers, this can help increase cash flow to help fund the business’s debt service.
Planning is needed to balance the current year tax benefit of taking these deductions vs. the future year benefits that may be lost by accelerating them.
Free up cash for debt service to pay for the new equipment.

13. 2017
Small employers may now reimburse employees for premiums paid on individual health insurance policies.
A Qualified Small Employer Health Reimbursement Arrangement (HRA) will not face the $100/day penalty on group health plans that don’t meet the ACA market reform requirements.
Penalty relief available for pre-2017 tax years
Identity Theft: & phone scams

14. The Fine Print
Disclaimer The content of this seminar is intended for educational purposes only. This seminar provides a brief summary based on our understanding and interpretation of current law. All tax references are to federal tax law only, unless otherwise stated. The information contained in this seminar is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as accounting, legal or tax advice or opinion provided by Concannon Miller & Co., P.C. The material presented may not be applicable to, or suitable for, specific circumstances or needs, and may require consideration of non-tax factors and tax factors not described herein. Contact Concannon Miller & Co., P.C. or another tax professional prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis the information contained herein; Concannon Miller & Co., P.C. assumes no obligation to inform the reader/seminar attendee of any such changes. The material presented in this seminar is not intended to, and cannot be used to, avoid IRS penalties. This material supports the marketing and promotion of accounting services. Seek advice based on your particular circumstances from independent tax, legal accounting, insurance, investment and financial advisors. Anthony R. Deutsch, CPA is a Certified Public Accountants in Pennsylvania and serves as Shareholder at Concannon Miller & Co., P.C.

16. Tony Deutsch, CPA, MT tdeutsch@concannonmiller.com
1525 Valley Center Parkway, Suite 300
Bethlehem, PA 18017